The introduction of machinery into manufacturing wrought vast changes also in the organization of business.The unit of industry greatly increased in size.The economies of organized wholesale production were soon made apparent; and the tendency to increase the size of the factory and to amalgamate the various branches of industry under corporate control has continued to the present.The complexity of business operations also increased with the development of transportation and the expansion of the empire of trade.A world market took the place of the old town market, and the world market necessitated credit on a new and infinitely larger scale.
No less important than the revolution in industry was the revolution in economic theory which accompanied it.Unlimited competition replaced the state paternalism of the mercantilists.
Adam Smith in 1776 espoused the cause of economic liberty, believing that if business and industry were unhampered by artificial restrictions they would work out their own salvation.
His pronouncement was scarcely uttered before it became the shibboleth of statesmen and business men.The revolt of the American colonies hastened the general acceptance of this doctrine, and England soon found herself committed to the practice of every man looking after his own interests.Freedom of contract, ******* of trade, and ******* of thought were vigorous and inspiring but often misleading phrases.The processes of specialization and centralization that were at work portended the growing power of those who possessed the means to build factories and ships and railways but not necessarily the ******* of the many.The doctrine of laissez faire assumed that power would bring with it a sense of responsibility.For centuries, the old-country gentry and governing class of England had shown an appreciation of their duties, as a class, to those dependent upon them.But now another class with no benevolent traditions of responsibility came into power--the capitalist, a parvenu whose ambition was profit, not equity, and whose dealings with other men were not tempered by the amenities of the gentleman but were sharpened by the necessities of gain.It was upon such a class, new in the economic world and endowed with astounding power, that Adam Smith's new formularies of ******* were let loose.
During all these changes in the economic order, the interest of the laborer centered in one question: What return would he receive for his toil? With the increasing complexity of society, many other problems presented themselves to the worker, but for the most part they were subsidiary to the main question of wages.
As long as man's place was fixed by law or custom, a customary wage left small margin for controversy.But when fixed status gave way to voluntary contract, when payment was made in money, when workmen were free to journey from town to town, labor became both free and fluid, bargaining took the place of custom, and the wage controversy began to assume definite proportions.As early as 1348 the great plague became a landmark in the field of wage disputes.So scarce had laborers become through the ravages of the Black Death, that wages rose rapidly, to the alarm of the employers, who prevailed upon King Edward III to issue the historic proclamation of 1349, directing that no laborer should demand and no employer should pay greater wages than those customary before the plague.This early attempt to outmaneuver an economic law by a legal device was only the prelude to a long series of labor laws which may be said to have culminated in the great Statute of Laborers of 1562, regulating the relations of wage-earner and employer and empowering justices of the peace to fix the wages in their districts.Wages steadily decreased during the two hundred years in which this statute remained in force, and poor laws were passed to bring the succor which artificial wages made necessary.Thus two rules of arbitrary government were meant to neutralize each other.It is the usual verdict of historians that the estate of labor in England declined from a flourishing condition in the fourteenth and fifteenth centuries to one of great distress by the time of the Industrial Revolution.This unhappy decline was probably due to several causes, among which the most important were the arbitrary and artificial attempts of the Government to keep down wages, the heavy taxation caused by wars of expansion, and the want of coercive power on the part of labor.
>From the decline of the guild system, which had placed labor and its products so completely in the hands of the master craftsman, the workman had assumed no controlling part in the labor bargain.
Such guilds and such journeyman's fraternities as may have survived were practically helpless against parliamentary rigor and state benevolence.In the domestic stage of production, cohesion among workers was not so necessary.But when the factory system was substituted for the handicraft system and workers with common interests were thrown together in the towns, they had every impulsion towards organization.They not only felt the need of sociability after long hours spent in spiritless toil but they were impelled by a new consciousness--the realization that an inevitable and profound change had come over their condition.
